A three-member bench of the National Company Law Appellate Tribunal (NCLAT) is scheduled to hear the plea of IDBI Bank seeking to initiate insolvency proceedings against Zee Entertainment on December 6 (today).
The case was earlier brought up for hearing on November 8 and adjourned after the counsel appearing in the matter sought the deferment to complete pleadings, as per a PTI report.
The Case
IDBI Bank has filed a challenge against the Mumbai bench’s ruling at the National Company Law Tribunal (NCLT). The order, dated May 19, 2023, dismissed the insolvency plea against a major media firm, citing Section 10A of the Insolvency & Bankruptcy Code (IBC).
NCLT stated that ZEEL, acting as the corporate guarantor for Siti Networks’ loan from IDBI Bank, had defaulted. However, this default occurred within the timeframe specified in section 10A of the IBC.
Section 10A prohibits the initiation of a corporate insolvency resolution process (CIRP) against any debtor for defaults occurring after March 25, 2020, for one year. This provision was introduced by the government to aid companies post-lockdown as economic activities gradually resumed.
NCLT emphasized that Section 10A permanently bars the filing of applications under Sections 7, 9, and 10 of the Code for defaults between March 25, 2020, and March 25, 2021.
Siti Networks had borrowed ₹150 crore for a working capital facility and was obliged to maintain a Debt Service Reserve Account (DSRA) as per the agreement. However, a default occurred in maintaining this account.
On March 5, 2021, IDBI Bank triggered the guarantee provided by ZEEL, demanding ₹61.97 crore plus interest from February 18, 2021, totalling ₹149.60 crore in default.
Additionally, IDBI Bank contested ZEE’s merger with Culver Max Entertainment, previously known as Sony Pictures Networks India, which received approval from an NCLT bench in Mumbai. This move has been legally challenged by IDBI Bank in a separate petition.